How Often Do Variable Energy Rates Change?

Choosing the best energy tariff can be time-consuming and confusing – especially when there are so many different energy suppliers offering various tariffs and deals. Energy prices have soared in recent years and reached record highs in December 2021. It’s never been more important to pick the best energy tariff!

We’ve put this article together to tell you everything you need to know about variable energy rates, including when they change and how they compare to fixed tariffs.

What is a fixed energy tariff?

If you choose a fixed energy tariff, you will pay the same amount per unit of gas and electricity for the duration of your energy plan. This will typically be for one year, 18 months, or two years. Remember that it’s the cost per unit that will remain the same, so you need to keep an eye on your energy usage. The more energy you use, the more you will be charged.

EPC For You advises that you can use energy saving technology such as a smart thermostat to improve your EPC rating and in turn reducing your monthly energy usage and save money on bills.

What are the pros and cons?

Pros of fixed energy tariff

• The amount you pay per unit of gas and electricity is fixed which makes it easier to predict the cost of your monthly utility bills.
• You won’t have to worry about checking wholesale energy prices or looking for a new supplier if they increase.
• There are lots of fixed energy tariffs to choose from and some deals come with additional perks.

Cons of fixed energy tariff

• If wholesale energy prices drop while you’re on a fixed tariff rate, then you won’t benefit from the cost savings.
• Most energy suppliers will charge you an exit fee if you try to leave before the end of your contract.

What is a variable energy tariff?

When you choose a variable energy tariff, the rate you pay per unit of gas and electricity will go up and down based on the wholesale energy price.

If the wholesale energy price drops, then your energy supplier will usually charge you less for your energy. However, you are likely to be billed more if the wholesale energy rates increase.

What are the pros and cons?

Pros of variable energy tariff

• Many variable tariffs do not have exit fees, so you can switch to another supplier without being charged.
• Your supplier will charge you less for gas and electricity if the wholesale cost drops, meaning cheaper monthly utility bills.
• Variable energy tariffs offer greater flexibility, and you won’t usually be required to sign a contract.

Cons of variable energy tariff

• There is no guarantee that your energy rates will remain low. They could increase significantly if wholesale prices rise.
• You need to monitor the energy market and move to a new provider offering a better deal if your supplier increases its rates.

How often can variable energy rates change?

Your supplier can update how much they charge you per unit (kWh) of gas and electricity at their discretion, but they must give you 30 days’ notice before applying the changes.

Energy suppliers are also governed by the energy price cap, set by Ofgem, and they cannot set rates higher than this limit. The price cap was increased in February 2022 to reflect the rise in wholesale energy prices and is now capped at £1,971 per year.

Is a variable or fixed tariff better?

Cable.co.uk explains how “it’s easy to be attracted to cheap, variable tariff options when choosing an energy tariff.” However, you need to keep in mind that these rates might not be the cheapest in the future, especially with rising energy prices. You will need to watch wholesale energy prices closely and shop around for a new tariff if your supplier hikes up their prices.

Fixed-price tariffs offer peace of mind as you know how much your energy bills will cost each month. However, they can be more expensive and may also come with hefty exit fees and other conditions.

Summary

Variable and fixed energy tariffs offer different pros and cons, and you should weigh up the options carefully. Do your research and make sure you understand the key differences between variable and fixed energy tariffs to help you pick the best deals for you and your home.

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